Bond issue returns in University Park

Five years after issuing bonds worth $24 million to purchase the University Park Country Club and its amenities, the University Park Recreation District has issued a second series of bonds totaling $21 million to upgrade the amenities.

Some residents are questioning the legality of the bonds and the impacts they could have on residents. 

“The UPRD board looks at the ability to issue bonds as a piggy bank,” resident Dean Matt said. “They are loading debt on the homeowners, and half the homeowners don’t even realize it.”

The board has a different view of the situation. 

“The largest asset that we have is our country club,” Chairperson Sally Dickson said. “If we don’t keep up with it and we don’t make necessary improvements to continue to meet the needs and the desires of our membership, as well as the people from the public who come in and enjoy aspects of what we offer, including golf and dining facilities, then that’s going to have an impact on our homes.”

According to Matt, homeowners are still paying down debt from the original bonds and will now be saddled with more. The bonds each carry 30-year terms and are added to homeowners’ property tax bills as non ad valorem assessments.

PFM Group Consulting, which supplies district management and financial advisory services to the board, estimated in November 2023 that the annual assessments per homeowner would range from about $900 to $3,000 over the next 30 years to pay for the 2024 bonds. In its methodology report, it provided an estimated assessment for each of the 1,202 homes in the district. 

Matt said the number PFM provided doesn’t show the total cost of the 30-year payments, which is why he says homeowners didn’t have all the information before voting.

“The board always speaks in terms of the minimum amount,” he said. “They’ve never acknowledged what the 30-year payment is. Used salesman have to do that.” 

The issuance of the 2024 series of bonds was passed in January with 62% of residents in favor of the action. Manatee County Circuit Court Judge Edward Nicholas successfully validated the bonds on April 29. 

Matt presented 34 exhibits to Nicholas in hopes the judge would either deny or delay the request for validation, but in Matt’s opinion, it wasn’t a fair fight.

“(Nicholas) actually went on a five-minute soliloquy telling me that if I don’t like or understand how homeowners associations work, then I should move to Myakka (City),” Matt said. “Moving from Chicago, I thought I would put corruption and good ole boys in my rearview mirror. Now, I run into it knee-deep down here.”

Matt is not a lawyer, but he has expertise in finance. He’s a CPA, who holds a Master of Business Administration and has served in chief financial officer roles for the past 20 years. 

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He also blew the whistle on a Ponzi scheme orchestrated by BCI Aircraft Leasing Inc. that raised more than $50 million. Matt was the Federal Bureau of Investigation’s key witness, and the owner of BCI was convicted in 2012.

Matt’s allegations include that the UPRD board withheld public records, made false statements, violated Sunshine Laws and never disclosed the total amounts of the principal and interest on the bonds.

Dickson either denied or declined to comment on Matt’s allegations. 

Matt and fellow neighbors in opposition are currently considering their appeal options with attorneys. They say an appeal would be based on two major issues: disputing that the district had the legal authority to issue a second series of bonds, and they say the special benefits of the upgrades don’t outweigh the burden of debt put on the homeowners.

Question of legality

Matt contends the second series of bonds should have never gone to a vote because of language stemming from the original bonds. When issued in 2019, the First Supplemental Trust Indenture, Section 5.04 read as follows: 

“Issuer covenants not to issue any other bonds or debt obligations for capital projects secured by non ad valorem assessments on the accessible lands within the district that are subject to the series 2019 non ad valorem assessments.”

A Second Supplemental Trust Indenture was signed by both PFM District Manager Vivian Carvalho and Dickson, and the above language was struck out of Section 5.04. Carvalho said this was signed on March 22, but the document is dated Jan. 12. 

To get it on the books, the board had to pass a resolution that authorized the execution of the Second Indenture. Matt’s issue is this all came after the vote. The resolution document, also signed by Carvalho and Dickson, is unclear exactly when the resolution was authorized. 

It reads, “PASSED in Public Session of the Board of Supervisors of the University Park Recreation District, this 8th day of January, March 2024.” 

The vote was on Jan. 16. 

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“Their attempt to change the language was after the fact,” Matt said. “When I argued that in court, no one objected that the existing language at the time in 5.04 wasn’t the operative language. They’ve subsequently fixed it. The judge botched the ruling and just looked the other way.” 

Carvalho called Matt’s claim inaccurate. 

“The bracketed language in Section 5.04, which was designated to be discussed, was conflicting with language in the offering document that was provided to bond investors,” she said. “The offering document made it clear that future assessments could be levied on the same benefited properties in the district.” 

An appeal wouldn’t be the first lawsuit the district has faced since being established in 2019. Resident Richard Garrett sued over the first series of bonds. He filed a temporary injunction to stop the formation of the district.

Forming the district was necessary to be able to issue bonds. Garrett eventually settled after the purchase price was reduced by $225,000, and the sellers – the Neal and Pasold families – eliminated an escalation clause that would have caused the price to increase by $46,000 a month.

“One of the several reasons I filed the original lawsuit was because University Park has a significant number of senior citizens who are on a fixed income,” Garrett said. “In my opinion, the bonds would be a burden on them.”

Beyond the Section 5.04 language, Matt said the burden of debt is his strongest legal standing in an appeal because of a 1992 Supreme Court ruling, City of Boca Raton vs. State of Florida. The case established that when bonds are issued, the special benefits must exceed the burden of debt.

Carvalho said Florida courts have found mathematical perfection is probably impossible when estimating the benefit, but the board’s assessment consultant said both prongs of a valid assessment were made with respect to identification of benefit and the allocation of assessments. 

Based on estimates by the Manatee County Property Appraiser’s Office, Carvalho estimates the value of the realized benefits in terms of price appreciation at 7.5%, which she said is how much the home values in University Park have increased each year since 2017. She said the debt burden is 2.73%. These percentages are based on 2022 numbers.

As of now, the bonds are valid and the board is moving forward with its plans. The upgrades have an estimated completion date of November 2026.